Tag Archives: globalization

America’s New Consumption Paradigm Must Divorce Multinational Corporations and Marry New Business Partners

America measures her prosperity by her ability to consume. Consumption makes life more full. It extends our health and comfort, and expands our experiences. While consumption is not the essence of our happiness, it does define the extent to which we can overcome the harsher limits the world imposes on our pursuit of happiness.

Our nation’s choice since WWII to embrace throw away consumption will now have to be questioned as we acknowledge the post cold war world that is competing for limited commodities. Yet our desire to consume as a nation is destined to increase. So a critical question facing America is how we will meet the future consumption needs of all of our citizens.

For the longest time up until the last 30 years, America’s consumption needs were met by a marriage between our businesses and our nation. We assumed that our businesses‘wealth and nation’s wealth shared the same checkbook and that America’s businesses would take care of our consumption. Our economy has since forever changed, the marriage has dissolved, and our checkbooks have been separated, but in many ways, our politicians and economists still consider this obsolete national comparative economics marriage to still exist.

To suggest a way forward, I ask that you first consider the analogy that America could initially be compared to a balloon in which America’s wealth, both of its businesses and its citizens, was the air inside. More air (wealth) in the balloon expanded its size and America’s total wealth. At some point in time, however, some businesses decided to remove their air from America’s balloon. Now America’s balloon depends upon a different set of stakeholders to keep it inflated. This analogy is presented further.

During America’s rise, for prosperity to reach all our citizens, the size of America’s balloon had to expand in proportion. What added air into the balloon? Land, commodities, long lived assets like buildings, and infrastructure, and intellectual achievements, are examples of items which added value and took a long time to deplete. Services and quickly obsolescing products like live stock and produce added value for a short time before being consumed. Wealth was measured in real achievements and assets.

What took air from the balloon? Consumption…The very consumption that we use for our pursuit of happiness. However, if we consumed more than we produced, air left the balloon and deflated it, making America poorer and less capable of meeting our future consumption needs. If all Americans stopped producing and simply consumed, our stores would soon be bare, our fields barren, and our housing dilapidated. To maintain the air in our balloon, we had to at least produce as much real assets as we consumed.

America’s objective was to create a positive flow of air into the balloon. Every American’s goal was to produce more real assets than each consumed. This was not always possible during troughs of business cycles as we experienced short bouts of unemployment. However, as our economy recently contracted, we found that 30 million Americans were left under employed and consuming more air than they produced for a protraction unlike any since the Great Depression, because no productive jobs existed to allow them to produce more.

The business of creating productive jobs typically falls on the entrepreneurs, businesses, capitalists and bankers of America. Together, they collaborate to determine how best to invest existing wealth, and to consume it to produce even more wealth. Capitalists, owners of wealth, and bankers, lenders of wealth, provide businesses and entrepreneurs the means to pursue business ideas that can produce more wealth. They do this as a means to increase their own wealth within our capitalist system.

The American capitalist system allows:

• Americans that earn more wealth than they can consume to own wealth
• Wealth to be stored as physical inventory or as currency
• Owners of wealth to earn a return on investment (ROI) for using their wealth as a risk buffer for wealth lenders.
• Banks to lend wealth to others in exchange for an interest return.
• For ROI and interest to concentrate wealth into the hands of wealth owners.
• For Americans to bequeath their wealth to their offspring, who accumulate it, further concentrating wealth for generations.

Important to the concept of our American monetary system is that the owners of wealth receive return on investment (ROI) and interest for letting their ownership of wealth to be used by others, for if they do not, they hoard their wealth and the American balloon does not expand.

As important as ROI and interest are to expanding our balloon, consumption is just as important. For it is in consumption that ROI and interest are earned, and in which more wealth is transferred to wealth owners and lenders. With each act of consumption, more wealth is transferred and concentrated to wealth owners as the price of their collaboration in growing America’s balloon. This is the construct of capitalism in America. Flawed as it is, it is the best system that the world has created for expanding economic balloons.

The flaw of capitalism is that once concentration becomes too great, the collaboration between wealth owners, businesses, entrepreneurs, workers, and consumers within the balloon begins to break down until we enter into a cycle of monetary collapse such as we are experiencing today. How does wealth concentrate and how fast does it occur?

From WWII, average return on equity and debt has averaged 10 and 8 percent per year respectively until recently. With a total market capitalization and debt of $100 trillion, worldwide wealth transfer to American capitalists and bankers of $9 trillion per year would occur if it were not for wealth redistribution to mitigate its effects. Even with mitigating effects, wealth inside America’s balloon has become so concentrated about every 50 years or so that it precipitates a crisis that requires a major redistribution of wealth just to restart the collaboration cycle once again.

After the Great Depression, America thought it fixed the concentration problem through regulations imposed as part of the New Deal. From WWII until 1970, it seemed that New Deal impositions combined with the rising power of American unions stalled wealth concentration and all quintiles of income rose together. For a brief generation, wealth concentration halted and the business cycle quieted.

But globalization rose to offset the New Deal and to quash the power of unions. Like an aggressive cancer, globalization rapidly reversed New Deal regulations and forever annulled the marriage of business and America. The national balloon had sprung a leak. Beginning in the late 1970s until the most recent monetary collapse, wealth began to concentrate once again in our upper quintile and most aggressively in our upper 1 percent of Americans. And this wealth concentration cycle was different than all previous wealth cycles in that for the first time in history, wealth was no longer constrained by national borders.

The age of the Multinational Corporation and international financial fiat money arbitrage had arisen. Now air could easily leave America’s balloon, as “free air” in the hands of its owners. From the 1980s onward, as America’s government and unions attempted their inevitable redistribution efforts, America’s businesses’ air flowed easily to reaches beyond their grasp. The abstract idea of “free air”, free from national balloons, became the mantra of its “owners” as capital flowed to countries that could provide a greater return.

Why did our nation not react even as the greatest exodus of wealth ever known occurred in front of us? Because during this thirty year Great Extraction of air from America’s balloon, our balloon kept the illusion that it was still inflated. Even as productive, wealth creating air was being sucked out of our balloon, for awhile the balloon maintained its rotundness through the wild speculative debt money being created by baby boomer loans. We bubbled through three separate booms as boomers borrowed historic levels of dollar debt to offset our depleting productive air. All the while, China fed low interest loans into the balloon to maintain its appearance as the Fed printed money to fill out the soft spots. Yet this historic debt was built upon a Ponzi mountain that eventually would come crashing down leaving our balloon limp and lifeless.

America’s balloon collapsed because of excessive concentration, excessive consumption, and excessive extraction of “free air” from our balloon. More importantly, the balloon collapsed because of our denial of the changing dynamics between business and America, and America’s failure to respond accordingly. America’s balloon no longer represents the marriage between all businesses and the nation. It no longer can count on the owners of “free air” to willingly do their part to subsidize the expansion of America’s balloon.

Instead, America’s balloon now excludes the wealth of capitalists, bankers, multinational corporations and other owners of “free air”. America can rent their air but only at international “free air “ rates. America must now count on and support those that are fully invested in our balloon, including those businesses that by virtue of their geography or purpose are tied to America’s future.

We cannot, however, be beguiled by the idea that we do not need “free air” Americans. We need elites’ capital and we need their investment in America. We just cannot expect it to subsidize America’s growth at their expense, as though it is an unmentioned, unmeasured, and unrepresented “tax”. On the other hand, we cannot continue to give our elites sweetheart deals that subsidize “American businesses” below international “free air” rates just because their lobbyists wear the false allegiance of the American flag upon their lapels.

America’s excessive consumption must be purged and replaced with a productive mindset. Government acceptance of the hubris of borrowing 43 cents of every dollar to fund the world’s largest government must be expelled along with any politician that accepts it as the norm. The baby boom mindset that believed America was blessed to live beyond our parents’ means even as we failed to create real, productive output to keep pace with our consumption must be replaced with the work ethic of our parents and grandparents who made America great.

Our 30 million under employed workers cannot be sidelined because international businesses that are not part of our national balloon do not hire them. They must be given a new hope to work on behalf of those businesses that fully partner in America’s 21st century balloon expansion. And businesses that fully embrace their role as partners in America’s growth going forward must be given the support to compete with the behemoth international businesses and international banks that now hold power in Washington.

Ultimately, America must replace our throw away consumption patterns with longer lived assets that fulfill consumption. The energy and commodity footprints that support our economy must be transformed to sustain a world growing more interdependent on the same commodities. America can commit to lead the world and to sell our newfound conservation consumption to ready consumers.

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Filed under American Governance, Multinational Corporations, U.S. Monetary Policy, U.S. Tax Policy

American Moments – Brush with Destiny – Multinational Corporate Indentured Servitude of 1607

The year is 1607, in the great nation of Chief Powhaten, the civilized American native nation of several hundred villages surrounding the Jamestown Colony> A conversation can be overhood between the Great Chief Powhaten with his warrior about the logic of free trade with this starving colony, this first of many international corporations that would invade America.

Warrior: “Chief Powhaten, we attacked the unfinished stockade at Jamestown and made progress at repulsing this English corporation, London Company, back into the sea. But they used techniques unknown to us to thwart us, firing iron from their ships. Nonetheless, they are but a few and our Powhaten nation is large, with several hundred villages and thousands of natives. We can easily defeat them and rid our country of these foreign corporations.”

Chief Powhaten: “No, we will let them live among us for they have these tools of iron that I want. We will give them our country’s trade secrets of tobacco farming so that they can make a profit off our land. We are a great nation. They are but a small company. Free trade will be good for us.”

Warrior: “What else do we have to trade?”

Chief Powhaten: “We have 275 species of plants as medicines, 130 as foods, and 27 as tobacco. For giving them these innovations that we have gained through living on this land for thousands of years, they will give us these trinkets of iron. Certainly this short term gain is worth our knowledge of ages.”

Warrior: “Yet they overwhelm our land. They send fleets of several hundred ships to deplete our fishing fields off our northern shores”

Chief Powhaten: “Yes but I am personally enriched by their trades of clothing and jewelry and our land is plentiful. If I felt that our nation could not sustain such an onslaught, I would not personally seek such enrichment.”

Warrior: “But for that, you are agreeing to grant their corporate leaders rights to thousands of acres of our people’s land!”

Chief Powhaten: “What are these rights but mere pieces of parchment on which I have scratched my honor on in ink. We record these debts on contracts which will never be repaid to these corporations. This land, these intellectual properties, our great nation’s wealth, has been our birthright since before recorded history and no small corporation, unknowledgeable of our ancestral ways, will ever take it from us.”

Warrior: “I hope for the sake of our nation that you are wiser than you seem. Else these corporations will come and live among us, indebting us to their ways. They will take from us our land. They will indebt our nation, and when we finally cannot repay their debts, they will gather us up and send us from our birthright, ill and dying from their smallpox, to till arid lands they deem as worthless, and our great nation will be forgotten from these times until the end of ages.”

Chief Powhaten: “Free trade… International Corporations…This is the way forward for America….”

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Could Boycotting GE Embolden America Against Globalization?

After having written extensively about the soulless, profit seeking nature of corporations that house their headquarters and claim “citizenship” within the borders of the United States, you will find no arguments here about the nationality of multinational corporations. Even though the Supreme Court of the United States ruled that corporations which spend $150 to file as “citizens” of the United States are indeed citizens, I would not be so naive as to believe its politically subjective error.

Even though America expects immigrants wishing to become citizens of the United States to exhibit patriotism for our beloved country, you will find no argument from me that corporations, attributed by our Supreme Court as “citizens”, should exhibit patriotism for our country. Patriotism, a devotion to one’s country, implies that “citizens” experience the love for and focus their attention on the needs of one’s country. For a corporation to be patriotic, it would put the needs of our country on par with the profit desires of its shareholders. Globalization has long since drowned the concept of shared stakeholders, save for one driving force, international shareholder profits.

My motivation for boycotting General Electric is not to punish GE for acting out its nature as a multinational corporation to create profits for its shareholders even when it harms the United States. My motivation for boycotting GE isn’t even to punish Jeffrey Immelt, who accepted President Obama’s appointment to work for American jobs while at the same time directing his corporation to drive jobs out of America. Corporations and their extravagantly paid CEOs act as one instinctual great white shark spreading throughout the world’s oceans, feasting on the most profitable of opportunities. No American boycott could lessen that profit motive, and no boycott could cause GE to have an epiphany of guilt, driving it to express an unnatural corporate patriotism.

My motivation for having America boycott GE is to have America wake up to the true nature of our modern multinational corporations. GE was the quintessential “American Corporation”, the darling of American business during the 1980s and 1990s, presiding over the silent gutting of America as 40,000 factories left our shores for the East. Now that the curtain has been lifted from the Wizard of Oz, we see Jack Welch’s progeny exposed in a lurid, multibillion dollar, one night stand with China, agreeing to a joint venture that not only takes jobs from America, but that competes directly with other American businesses and that gives American intellectual property of direct import to our national security to the Chinese.

By boycotting GE, I would hope that Americans could gain the understanding that corporations are not “citizens” of America and that they have singular profit motivations that do not necessarily align with the security and welfare of our nation. By boycotting GE, I would hope that Americans would challenge those politicians that dare to continue to provide cover for “free trade” and globalization through passage of lobbyist led anti-American legislation. By boycotting GE, I would hope to awaken our regulators to finally act on behalf of our country over the objections of great white sharks of profit that have found America such an easy victim over the past 30 years.

Once America is awakened, we can finally embolden our political leadership to act in the interest of all Americans, to create incentives for these profit motivated monoliths to reinvest in our country, to create a business environment that will help align their interests with those of the United States, and to disincentivize corporations from mindlessly making decisions on behalf of shareholders without cautiously considering America as an important stakeholder in their risk adjusted, profit motive decisions. Boycotting GE is America’s future displayed in effigy.

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Globalization Transfers a Nation’s 70 Year Depression Cycle to the Entire World

The Great Depression of 1929, more than any of America’s depressions before it, showed that although capitalism is the world’s greatest engine of economic progress with no better alternative, it does contain a great flaw that periodically destabilizes the capitalist economy. As each business cycle progresses, wealth and commercial power concentrates in the hands of a few, limiting competition and consumer demand to the extent that the economy and the money supply collapses through nested debt defaults. When this occurs, the overhanging debt and undervalued assets cause a commercial vacuum that is hard to correct.

After, the Great Depression, America instituted controls intended to limit the flaw of capitalism, attempting to limit the concentration of market power in oligarchies and the concentration of wealth in the capitalists, hoping to create a more sustainable balance in the economy. Over time, America’s politicians were lobbied successfully to remove these limiting regulations so that once again concentration was permitted to flourish. However, different from every other concentration cycle, this time concentration was able to effectively cross international borders through globalization.

Having accumulated a concentration of wealth and commercial power needed to seed expansion into globalization, during the last thirty years American businesses have run headlong into the greatest transfer of wealth and capital across international borders ever known. With globalization, America’s nation state has lost much of her ability to regulate what have become multinational corporations for the good of her people.

The result of this loss of power is that similarly to how capitalism’s flaw allows a periodic transfer of wealth from a nation’s workers to its capitalists, indebting the working class until it no longer can support an increase in the economy while servicing its debt, ultimately resulting in the collapse of the nation state’s money volume into 60 to 80 year cyclic depressions, globalization’s flaw will also ultimately prove similar but on a world wide scale. The expansion of the multinational corporation will allow a periodic transfer of the entire world’s wealth from nation states to corporate states ending in a disproportion of wealth that ultimately will cause a worldwide monetary and fiscal collapse.

Prior to the rise of globalization, corporations existed within the laws, regulations, and taxation of single nation-states. They depended on the customer base of single nations and the stability of their nation’s business environment. They also depended on their host country’s mercantilism and military strengths for their relative worldwide trading power. With a prevalence of dependence on their nation states, they negotiated with their stakeholders from a position of relative weakness.

After the Great Depression through the 1970s, corporations contended with the growth of collective bargaining, socialism, environmental regulations, and antitrust interference in their oligarchic profit strategies. With such a lopsided negotiating power structure, corporations were relegated to lobbying behind the scenes for needed legislative and regulatory support as a means to balance their unequal negotiation positions.

Throughout this period, America’s focus on defeating communism through overwhelming military strength had two unintended effects. First, America’s burgeoning military allowed American businesses to expand unopposed into world markets through the bully pulpit of the U.S. military. Second, with the winning of the cold war, the emergence of Eastern markets, and the opening of China creating such immense business opportunity for American businesses, they could now use their legislative relationships they had developed in earlier years to support their participation in the modern gold rush.

American businesses sprinted to these new profit fields in an effort to gain a stake before foreign competitors. To do so, they needed availability of low cost loans and a commitment to open access of American consumer markets. To gain open access to American markets, businesses needed the support of politicians to sell the argument that open trade was a net benefit to the American consumer and that it was essential to America’s success. Winning this public argument then provided cover for politicians, who were beholden to the multinationals and associated banks for campaign funds, to vote for opening America’s markets to foreign manufacturing facilities. This was the beginning of America’s job emigration. We let the job killing Mongols over the wall.

With (a) the debate about open trade behind them, (b) China eager to accept their hard assets and intellectual capital into her country, and (c) banks having maneuvered financial deregulation to extract American capital from consumers, American multinational businesses were now free to expand their direct foreign investments exponentially. As they did, their corporate structures became ever more multinational and their negotiation position with nation-states strengthened considerably.

China, for one, represented negotiations with corporations as between equals. Initial negotiations were win-win and entrepreneurial because expanding corporations and emerging nations wanted separate assets which they valued differently from each other. Corporations wanted and received low cost inputs to production, low cost educated labor, minimal environmental costs, and loose business regulations. China gained access to hard assets, America’s consumer market, trade deficits, American corporate processes and intellectual capital.

Intellectual capital was most important to China so that she could leap frog American know how by creating entire cities to manufacture single products, and providing America’s intellectual capital and business knowhow to the city so that geographically concentrated Americanized core skills could develop. Yet for American multinationals, they valued China’s market potential much more than their own intellectual capital which they believed china could otherwise reverse engineer. They also discounted China’s ability to compete, and felt they could mitigate giving China their secrets by keeping research in America and innovating more rapidly than China.

Once established across multiple countries, multinational corporations now had strengths they never had before. While nation states were able to impose the same wage restrictions, regulations, and taxation as before, multinationals now had mobility to transfer labor, production, distribution, and profits across national borders. Corporations no longer negotiated labor rules and wages from weakness but could now set world wage rates. Through the likes of tiered corporate structures, offshore subsidiaries, multinational accounting, and transfer pricing, corporations could now dictate effective world tax rates. And through multinational diversification, corporations were no longer constrained in size by the whims of any one country’s antitrust laws but were now free to grow unrestrained.

Through globalization, nation states lost the majority of negotiation power they once had. They could no longer command the supply side. Labor could migrate to the nations with lowest overall cost of production and distribution including taxation. Nation states were also forced into political decisions regarding protection of domestic producers that could not compete with foreign costs. And the politicians that would have to enact laws to make domestic goods more attractive could not risk offending their benefactors, the foreign direct investment owners of foreign factories. Nation states could no longer command the demand side either. Their citizens, having tasted the benefits of low cost consumer goods, would not sit idly while prices were increased through substantial tariffs.

With such strengthened negotiating power, multinational corporations ascended to new ranks in the world economy as virtual corporate states, similar in power to nation states yet without the incumbent obligations to citizens’ social welfare. Having loosened the limiting bonds of national antitrust laws, Multinationals could now increase their size without bounds and, as a result, grew to have “economies” that rose above those of most nation states.

The world has yet to fully understand the power of the corporate states, but emerging nation states are embracing multinationals’ newfound power as a means to gain arbitrage power from industrial states. In doing so, they feed and strengthen corporate state power sending the world toward unsustainable wealth concentration. Industrial states have not reacted by collectively attempting to regain a foothold to create regional political regulations but instead are slowly acquiescing to a concentration of corporate state power as all have been left impotent at the direction of their elected officials.

Yet concern for multinational corporation concentration of power is rising amongst western industrial states as all are affected by the corporate state induced economic crisis. Cries for isolationalism, protectionism, and proactive job creation legislation have surfaced once again amongst labor unions and domestic businesses as unemployment has risen, yet their cries come too late for America, having already lost 40,000 factories, 8 million jobs, and trillions of dollars of intellectual capital, core skills, and future development that will never be as a result of these transfers.

The premise of free trade has proven a fallacy. Yet now that globalization is upon us, no country has the power to reverse it. Without collective action to globally regulate multinational corporations, individual industrial nation states will eventually attempt to thrust kamikaze assaults on the power, finance, and asset transfers that have already reduced the future of industrial countries in favor of emerging ones and emerging countries will abandon old world colonialism in favor of new world corporate subjugation. And we will all live through the first experiment of global concentration of wealth and power that promises eventual world collapse. If national capitalism collapse takes 60 years, how long does globalism collapse take?

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Will We Let Free Trade Finish Its Gutting of America?

Tariffs have long been both the nemesis and the whipping boy of the advocates of free trade. Whenever America falls into recession, advocates of jobs tout tariffs yet free traders nonetheless target them as enemies of consumers. They point to low cost goods that have helped American consumers during our recessions as a universal benefit. What they cannot show is whether the benefit of low cost goods offsets the millions of American jobs that have been lost as a result of free trade. But if free trade with the East has severely harmed America, free traders have somehow thus far escaped the scathe of America for having put free trade in motion and having failed to reverse direction when their message was proven hurtful to our national security.

A disciplined look at the use of tariffs would show that win-win free trading between nations of equals is indeed helpful to both nations and requires no tariffs. However, that same objective review would show that free trade between dissimilarly wealthy nations allows the less wealthy nation to extract the wealth and jobs of its trading “partner” and when this principle is put on steroids, the less wealthy nation can collapse the wealthier nation.

In the case of America, a lack of tariffs allowed China to create a lending practice of “live filleting”. She stripped the meat of America‘s economy right from our bones without even using western anesthesia. Instead she fed us our own dollars as loans to keep our interest rates down while artificially suppressing her currency to keep her product prices low for our consumers, a unique kind of Eastern financial acupuncture.

She is now setting about to pull the free trade needles from the pressure points of America’s political nervous system, having instructed her credit agency Dagong to start this credit downgrading slippery slope. When she does, we will all feel the stinging pain of a raw economy stripped bare of its future. The higher prices of American goods that we thought we escaped through our addiction to China’s low priced goods were just temporarily delayed through borrowing three billion dollars of debt from China. The price we will now pay for decades of higher interest rates as we struggle to rebuild our economy will more than offset the folly of our “free market” dalliances.

Could American’s rights to own property have combined with free trade to allow China’s gutting of our country? Property rights were as an essential capitalist core of our Constitution as they were for the ancient civilization of Rome. Property rights are critical for the creation of elite’s wealth and without them capitalism cannot exist, globalization cannot thrive, and a nation’s elite cannot transfer the wealth of their country to other nations for personal gain. Therefore property rights allow gutting.

How so? People that own the value of a country, let’s say U.S. capitalists, transplant that value as factories to another country, China, who uses them to create goods for the U.S.. That transplanting of capital transfers competitive advantage to China so that American jobs are lost and America’s middle class loses purchasing power. To buy China’s goods, Americans then borrow dollars from international banks and exchange the dollars for the goods created in China. Because jobs are lost, America’s government loses tax revenue and borrows dollars from China who then loans some of those dollars back to the people through their government. The U.S. government then gives the dollars to government employees who buy more Chinese goods.

Some of the dollars that are given to China are given back to the capitalist who then borrows more dollars from international banks who create those dollars from thin air. The capitalist then uses both the dollars given by China and those created by the banks to transfer them back to China as more factories which displace more American workers.

As this cycle repeats over and over, 40,000 factories are transplanted, 8 million workers are displaced, $3 trillion dollars are borrowed from China by the U.S. government, and $8 trillion dollars are borrowed by the American people from international banks who multiply this $8 trillion into $45 trillion of credit default swaps to extract even more capital from the capitalists to invest even more into factories in China.

In the end, China has a bunch of factories to make goods for their 1.3 billion internal customers and has hegemonic relationships with the world’s commodity suppliers because America no longer has factories that need them. China raises her currency’s value because she now needs her citizens to buy her factory goods and she stops funding America’s deficits so that our interest rates rise. The American government and American middle class are indebted to China and now must pay more interest.

The American capitalist has his net worth sitting along China’s shore in danger of being nationalized when China’s currency raises to the point that American people can no longer afford to buy China’s goods. The international banks have a good amount of value invested in these dangerously leveraged Chinese factories and their financial assets, loans to America’s middle class, are stretched wafer thin by Americans who borrowed more than they could afford and by corporate credit default swaps that also rest on a house of cards of American middle class debt.

Middle America’s debt is in danger of default as it is supported less and less by jobs that are pouring one by one as sand granules through the neck of an hour glass to China. When the last grain of sand needed to keep the cycle going slips through the neck, the Western financial system collapses, China retains the factories with over a billion internal customers, and America’s elite and middle class are left to fight over who will continue to pay the debt and who will escape financial calamity through default.

So when we talk of property rights, we are talking about the rights of a country’s elite and international bankers to create massive capital flow engines to drain the wealth of one civilization to another. Absent government intervention of tariffs and other financial tools or ultimately of war, when wealth differentials exist between civilizations, property rights and banking create the opportunity for wealth differential arbitrage. When nations of relatively equal wealth trade or exchange value through direct foreign investment, free trade creates a marriage of sorts. However, when wealth differential exists, arbitrage can destroy the value of the wealthier nation in favor of the emerging one.

This is the awesome power and the fatal flaw of capitalism when combined with international property rights. In 1871, Europe’s power was transferred to America through this frenzied flaw and they were left with a 20 year depression before recovering. Now it is America’s turn to suffer the flaw of property rights that were cemented in our rule of law by the Supreme Court of the United States. Most of the horses are already out of the barn. That does not mean we shouldn’t dust off a modern version of tariffs to reverse what outward flow remains.

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We must Retool the World’s Economies or Risk Capitalists’ Return to War

After American refuse centers fill with rubbish, we just build new ones, placing them far away to ensure their gases and seepage don’t leak out to bother our consumerism. We know our western culture’s buy and toss mentality is unsustainable, and yet it is our entrenched framework of capitalism that may only be reversed by crisis. Now, in parallel with our capitalistic trash piles, we have grown a nationalistic debt pile. The “hide our trash” mentality that has been successfully used to cognitively disconnect our consumer culture from its ramifications will now most likely be transformed from a physical trash mentality to a financial trash mentality.

What is required to minimally sustain the world at least at its current health and welfare level is a revolution of thought regarding commodities and human capital. Unfortunately, instead international banking will stop heaping financial debt on the spent, Western refuse piles and will simply transfer this debt to new seeping, gaseous financial and physical trash piles to the East. Capitalism will not be transformed but rather transferred at least as long as commodities exist in sufficient amounts.

However, during the next two generations, as commodities follow their parabolic rate of decline and world demand increases exponentially, the resulting accelerating cost of commodities will either drive capitalism to its risk precipice causing the captains of capitalism to once again stir their nations into reactionary world wars, or, on a more hopeful note, as new, enlightened capitalists take the helms of their strained organizations, they will encourage an alternative transformation of the world’s culture to conserve commodities and to produce end materials of lasting value.

Alternative transformation will require redesigning our world’s industrial based primary education system to support conservation. It will require reengineering our consumption cycle that during the last four decades of globalization, transferred infrastructure eastward, collected worldwide commodities, sent them through the East’s production, and distributed the quickly obsolescing end products by massive transworld shipping for consumption and trashing in the West. It will also require retooling entire civilizations to add higher human capital value per unit of product instead of higher volume of products per employee. How can such a massive undertaking occur through billions of invisible hands of competition?

How can the world preserve remaining world commodities while maintaining high employment and increasing the world’s standard of living? Its first attempt in Kyoto at preserving commodities resulted in regional attempts to punish old world oil consumers while giving new economies a leg up in future fuel consumption. Kyoto’s problematic focus, similar to WWI victors attempt to right the world through war reparations of the vanquished, resulted in the cynical knowledge that the world’s politicians were not yet up to the task. Without collective political action, is the world destined for war as has always been man’s knee jerk solution?

The ultimate consequence of a failure to retool is widespread disease, famine and destructive reduction of an unsustainable world population. Does the U.S. Government have a proactive role? Yes, it can leap frog an economically violent transition by sensing the government supported changes that will be needed after an upheaval and simply move to put them in place beforehand. Examples of such moves could include changing the tax policy to influence the reduction of planned obsolescence and the byproduct of trash. Another would be the inculcation of values and capabilities in the school system toward the commodity problems we face. While government will not replace the billions of invisible hands required to force change, it most certainly can work in concert with them to affect a less violent outcome.

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Filed under American Governance, American Politics, social trajectory, World Sustainability

America’s Future Building Block #4 – Eliminate Minimum Wage and Fully Employ America….

While governments may choose to ensure that all citizens receive a minimum amount of dollars to consume, in the age of globalization, governments should not attempt to force this social welfare through minimum wage controls. Wages should be set by the market and any shortfall between wages and government’s socialized minimum family consumption floor should be made up by other socialized means.

At first glance, this assertion seems to support eliminating the historical gains made by workers against business’s exploitation. It seems to suggest that governments would thwart worker’s collective bargaining rights if they were to eliminate minimum wages. Yet these notions must be swiftly resolved if industrialized nations are to protect the security of workers jobs from their continued drift off shore. For America, minimum wage controls must be eliminated if America is to bring jobs back from overseas.

I hypothesize that the minimum wage, through its intermingling of two key concepts, is a poor attempt to force businesses to solve an American social goal. First is the concept that all Americans should by virtue of being born in America of having joined us through naturalization be guaranteed a minimum standard of living. Second is the concept that companies should only hire an employee if they can guarantee them, through employment for 40 hours per week, the minimum standard of living that has been set by our government.

This idea of an American minimum standard of living has never truly been established but we flirt with the idea in various ways. One attempt was the establishment of the poverty level as a measurement of President Johnson’s war on poverty. The poverty level established a family income that represented the ability of families to meet food and other basic consumption needs.

Minimum wage and poverty levels are fairly arbitrary and do not take into account actual cost of living differences between places like New York City and Jackson, Mississippi nor do they compare the level of consumption of poverty stricken Americans with the rest of the world, most who live well beyond American standards.

However at around 15%, poverty levels in America are once again approaching percentages close to those when America started measuring them in 1965. Since the methodology has not changed much in 50 years, the relative figures are consistent and demonstrate that our war on poverty has not been won. Yet the figures have been used by America’s legislation as a basis for multiple government redistribution programs and have since been ingrained in our political system.

The minimum wage is just as arbitrary as the poverty level and is not tied to it in any way. Earning the minimum wage actually places a person below the poverty level, yet it does create a somewhat lower floor than the poverty level for those Americans who are fully employed. And in the absence of collective bargaining, the minimum wage is an effort to protect the value of a workers’ worth. Why then should eliminating it be considered?

Prior to the emergence of the international corporate industrial state, growing American monopolies increased profits by reducing costs of providing safe and comfortable working conditions for workers as well as by providing low wages. For decades, workers collectively bargained for both better working conditions and for better pay. In addition, the federal government supported the collective bargaining process through the establishment of the minimum wage and by redistribution of corporate profits through taxation. Yet the creation of these defenses against corporate abuse led to antagonistic employer/worker environments that fed an examination of international wage differentials and an outflow of jobs to countries with much lower wages and workplace restrictions.

Many recall the showdown portrayed in Michael Moore’s first documentary “Roger and Me” in which GM gave its workers an ultimatum in Flint, Michigan; accept substantial pay cuts or accept a closure of Flint’s plant and the destruction of the town. Instead of accepting the pay cut, grossly misunderstanding the changing dynamics of the globalizing world, GM’s workers chose to strike against lower wages and the plant closed, devastating Flint. Globalization establishes the world’s value of a job, no matter the indignation felt by Americans for having to work at that price level.

Choosing to not accept the global price because of some indignation felt about the low value placed on international labor only eliminates the worker from participating in the global work place. Placing a minimum wage above the global price for labor only forces labor to migrate to other world locations that do not set minimum wages above the global wage rate. Taxing corporations above the global taxation rate to support externalized costs of higher unemployment that result from minimum wage policies only speeds the movement of labor offshore.

In the age of globalization, any one country’s defenses against corporate wage abuses are impotent against the international corporate industrial state without the support of other countries. While countries could band together as an international collective bargaining unit to defend the rights of higher wages for workers, many countries are willing to accept much lower wage levels than the United States. Those countries that accept a much lower wage rate will therefore gain the jobs that America’s minimum wage sends to them.

Can’t America let other countries have the low paying jobs while our businesses create higher paying, more skilled ones for all in America, making minimum wage obsolete? Even if America was able to create enough jobs above minimum wage so that all qualifying Americans could get higher paying jobs, the simple truth is that intellectual and physical bell curves exist in any population, including America and many Americans would simply not qualify for those jobs. In addition, the poor state of our public schools creates a dropout rate that could not begin to support such a higher breadth of skill level required for all Americans to have such jobs. If that many high paying jobs could be created in America, they would simply be left unfilled. No, if all workers are to be able to contribute to our society, then some jobs must be filled at global wages well below the minimum wage that has been set in America.

Does that mean that those Americans who are unable to fill positions that pay above the minimum wage should have to live below a minimum sustenance level that is now being partially maintained by the minimum wage? …of course not…. However, as I previously pointed out, minimum wage levels are not the appropriate mechanism to meet those needs. Our government has multiple social welfare tools at its disposal that should not hinder business to accomplish supplementation of income.

Because some Americans should have to work at less than the current minimum wage and must be supported by other means to reach a social floor, should high wealth individuals be forced to fully support their shortfall?…Of course not… But, the idea that continues to be suggested by defenders of Reagan’s trickledown economics of lowering taxes on the rich as a solution to America’s wage and job ills should simply be refuted on the silliness of its merits. It has proven to be a fallacy of pre-globalization politics that by its very nature is illogical. This once revered solution has been antiquated by both globalization and America’s promotion of greed as accepted driver of business.

History has with few exceptions shown that given more money to invest, wealthy Americans will invest it in higher returns of other parts of the world instead of relatively lower returns found in America. However, higher tax rates on capital gains and income of the highest few percent of American earners with offsetting tax reduction opportunities to invest back into America should coax our high wealth individuals back into responsibility for America’s welfare and stem this downright harmful trend toward America’s future.

If corporations are relieved of their minimum wage burdens, should they also be relieved of any responsibilities to sustain America’s workers who do not qualify for higher wages? Of course not…. However, mechanisms that force corporate participation should not incentivize them to move labor offshore. Business participation should instead be mandated to support government social policies through tax reductions for investments in infrastructure that support additional labor and through tariffs for products supplied to America that hinder American labor without greater, offsetting benefits.

Can organized labor be allowed to create wastelands such as Flint, Michigan by placing a stranglehold on global wage levels for jobs that have long since been pressed downward below minimum wage? Of course not…This last bitter pill may be the most difficult to swallow. While labor must be allowed a full participation in the corporations’ development of global competitiveness and must be able to transparently understand labor’s value and role in the corporation’s international success, any support for labor to thwart full employment by forcing excessive labor rates should be rejected as well.

If America’s objective is for all Americans to be fully employed and contributing to our nation, and for our country to support all workers with a social net floor of consumer spending that allows all to live in dignity, then more logical solutions than minimum wage exist. If only America can work through them.

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Is the China Gold Rush Ending?

In 1849, a rancher named John Sutter sent men to the American River to build a saw mill. Instead, they found gold, starting a rush that brought over 300,000 ‘49ers from across the world to eventually prospect another $12 billion in gold from surrounding hills. The discovery created an enormous expansion in America’s money supply, some by the very gold found in nearby streams. However, much more money was created by debt instruments that funded the Gold Rush. Banks funded the passage of thousands prospectors to buy passage to California, to purchase goods to pan for gold, and later to fund companies that organized for that purpose. By 1850, banks from St. Louis, Boston, New York, London and Paris spurred the growth that created the State of California.

The growth of population in California and Oregon fueled railroad expansion to the West. The completion of the Transpacific Railroad in 1869 started a great railroad speculation, funded both by American banks and European investors. In four short years, investment of track doubled to 35,000 miles. America’s investment in rail and encouragement of immigration spurred a revolution of competitive wheat production and American export of low priced wheat to Europe. Europe now found that the capital it had supplied to build America’s railroads, gathered from its previous decade of speculative housing construction, was the very capital that fueled its demise into a depression which lasted from 1871 through 1893.

With the shortfall of hoped for European funding, American banks became overextended as speculation continued unabated. Jay Cooke and Company, the Goldman Sachs of the time that had funded the North during the Civil War and that had funded the successful Transpacific Railroad, tried and failed to corner the gold market to fund its investment in the Northern Pacific Railroad. Instead, it was forced to file bankruptcy in 1873, triggering America’s Long Depression, collapsing major banks, bankrupting 89 of 364 railroad companies, and an additional 18,000 businesses. The extreme speculation and overbuilding in the one industry of railroads triggered a great depression. This massive over speculation was not seen again until the even greater housing industry speculation in America that ended in 2008.

Similar to California, China has become the land of gold rush for EurAmericans. In 1978, China embraced its four modernizations and opened its doors to the West, creating a gold field of capitalist opportunity. Gradually at first and then in a frenzy, tens of thousands of businesses rushed into China, over ten thousand U.S. businesses in the last decade alone. Similarly to America’s gold rush, U.S. and international banking interests made a fortune supplying MNCs with the capital required for their prospecting.

To feed this frenzied opportunity, American banking interests tapped into the immense financial wherewithal of the American people. Through a Great Ponzi Trifecta, banks accumulated debt derived capital from the Savings and Loan Ponzi, the Dot.Com Ponzi, and finally the greatest Ponzi ever known, the EurAmerican housing bubble. Hordes of EurAmericans were convinced to leverage their future earning ability to create debt that could be flipped through derivatives to fund China’s gold rush.

A dollar multiplicative frenzy sped much of America’s future wealth creating potential into China prior to the Ponzi’s ultimate collapse. As housing prices, and subsequently commercial real estate prices, soared beyond the ability of the American economy to cover the underlying debt, the purveyors of this debt mountain continued to assure investors that a new economy had emerged that supported such imbalances. Yet American wages did not keep up with the rise in housing and counterbalancing forces such as a lost industrial base and historic government deficits finally stripped the Ponzi of its legs, and America’s Great Middle Class funding of China’s gold rush subsided.

Just as Europe lost its wherewithal to fund America’s railroads after America undercut European commodity prices in the 1860’s, America lost its ability to fund China’s growth as MNCs gave China the ability to undercut American industry. However, unlike 1873, America’s Federal Reserve softened the impact of international banking excesses, mitigating the collapse of Bear Stearns, protecting the securitization of AIG, and supporting world banks through massive expansion of its money supply. However, the implosion of the securitization market left China with a weakened EurAmerican engine of direct foreign investment.

June, 2011, marks the supposed end of debt driven EurAmerican speculation helping to fuel China’s growth with the pre-announced ending of Quantitative Easing. If Bernanke follows through on his promise, America’s money supply will begin to contract similarly to America’s contractionary policy following the Civil War leading up to our Long Depression of 1873. Our Congress is also debating contracting governmental spending simultaneous to the Feds potential contraction of money.

Recent reports may have quietly forebode America’s double dip recession with the downward reversal of home prices and downward reversal of job creation. Has China enough momentum to continue its meteoric expansion without historical capital infusion from the West and with a contracting EurAmerican market for its goods? Or, will China face the disruptive consequences of the world’s most recent speculative bubble?

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How Could America Have Squandered the Gold of Ancient Egypt and the Incas?

Gold has been the store of human endeavor since ancient times. While each ounce of gold can hold only a finite amount of labor, perhaps 1,000 hours in non-industrialized nations, some of the gold locked in Fort Knox has touched millions of hours of labor from civilizations untold. For gold’s greatest benefit, as with all money, is not its storage of value but its lasting ability to temporarily hold value in the exchange of non-coincidental barters.

For millenniums, money was the interchange commodity for simple trades as between farmers and herders. The farmer gave the herder a coin in winter for meat, and the herder returned the coin at harvest time for a bushel of vegetables. Farmers and herders relied on the value of gold because precious metals took effort to mine and purify, were tested for weight and purity, and could be stamped, coined and carried. With such a universal appeal, precious metals became synonymous with storage of value and dominated the world’s choice for money.

At one point, America held within its coffers 70% of all the gold that has ever been purified from ancient Egypt and the Incas through modern times. But it was our misjudgment as to the true value of gold that robbed our forts of ingots and brought America to the precipice of ruin. As history’s greatest superpower, why did America not learn from ancient empires that tumbled down the path to insignificance, and why did we allow our government to amass more debt than has ever been owed by every other soul that has ever lived?

1964 marked an accelerating turning point in America’s misfortunes. In 1964, President Johnson was elected to enact Great Society reforms just as America was increasing her involvement in Viet Nam. Baby boomers were entering the work force just as multinational corporations were beginning an upsurge of direct foreign investment and the transfer of jobs to overseas markets. America’s use of oil was peaking just as political undercurrents were coalescing around oil as a geopolitical force.

Six simultaneous assaults on the American dollar joined to fuel the American financial malaise; a lack of fiscal adherence to a gold standard, military excursions in support of American interests, funding of the great society, a lack of will to respond to oil cartels, multinational corporate indifference to the plight of the American worker, and a financial industry gone wild.

America did not Steward Its Gold

Even though, for 600 decades of recorded history, gold was the stable base of transactions, the world has temporarily abandoned this gold standard for the last 5 decades. Our abandonment was not because of the world’s enlightenment that gold is an unnecessary physical impediment to the electronic age of finance. It is because, with no viable alternative, the world has clung to the hollowed out American dollar that inflated beyond the discipline of the gold standard.

In the 20th century, industrialized nations twice attempted to redistribute wealth through great wars that left all of Europe bankrupt. Afterward, America held 70 percent of the world’s processed gold, and became through Bretton Woods the gold-backed, paper money guarantor of the free world. During the next 15 years, America squandered her gold to cover currency imbalances, until by 1960 the dollar lost its legitimacy. Interestingly, it took Spain over a hundred years to squander its 20,000 tons of Inca gold.

From 1971 until now, America and the rest of the world have had little choice but to allow our currencies to float, giving up the imperfect discipline imposed by a gold standard. As a result of America’s freewheeling monetary policies, it is now encumbered by a spend drunk Congress and an obliging central bank that have conspired to reduce the value of America’s 1971 fiat dollar to a mere 17 cents today.

Scholars suggest that the reason for the dollar’s fall was the inevitable Triffin dilemma which requires America to carry a current account deficit to provide the world with reserve currency. Yet debt financed trade imbalances are not required to provide reserves. Reserves could just as well have been sold to other countries as given to them through trade shortfalls. No, America’s post war monetary policies quickly gambled away the historical hegemony that was bestowed on us at the end of two world wars.

This five decade hiatus from a gold standard will prove only temporary. Gold’s appeal as the engine of financial growth has not been lost on China. At the end of World War II, U.S. gold reserve was over 18,000 tons but has since reduced to 8,000 tons. China is executing a strategy of purchasing approximately 250 tons per year and, as the world’s largest producer of gold, producing 320 tons per year, and now has surpassed all but the U.S. as the second largest holder of gold with 2,000 tons.

Military Excursions Drained America’s Coffers

Without the ability to borrow vast moneys, earlier civilizations relied on warring, exploration and conquest to quickly expand their stores of gold. This strategy was not without consequences. To fund war, Rome engaged in coin clipping and smelting with lesser metals to reduce size and value of denarius in attempts to pay soldiers with coins of veiled value. After 200 years, the Roman denarius reduced from 100 percent silver to only 5 percent just prior its army leaving Rome unprotected from invasions and fall. Interestingly, it has taken less than 100 years for America’s dollar value to plunge that amount.

As all empires have before, America found that its wars must be financed with inflation. The Fed supported an excessive expansion of the money supply (dollar clipping), creating debt to fund each of America’s wars. The Civil War added 2.8 billion. WWI added another 21 billion. WWII created another $216 billion. The Korean War was financed with taxes. Viet Nam increased the debt $146 billion. Cold war expenditures cost 1.6 trillion. The first Gulf War cost a mere $7 billion. In contrast, Iraq cost $786 billion and Afghanistan cost $397 billion. Not including the 700 foreign soil U.S. military bases that contribute greatly to America’s balance of payments deficit, her major wars added a total of $3.4 trillion dollars of carried debt.

The Great Society Became the Broke Society

President Johnson outlined The Great Society in his State of the Union Speech on January 4, 1965, saying “The great society asks not how much, but how good; not only how to create wealth but how to use it.” Notwithstanding the good that was done by these programs, they drained America’s future potential GDP growth and the money that would fuel her economic engine.

46 years later, Great Society initiatives touched education, health, urban renewal, transportation, arts and culture, Medicare and Medicaid, the Food Stamp program, Project Head Start, The National Endowment for the Arts, The Corporation for Public Broadcasting and federal aid to public education for a total expenditure of $9.5 trillion dollars.

America’s Addiction to Oil Made Us Slaves to the Oil Cartel

Oil enabled powerful nations to create a world order that flowed money from agrarian nations to those that controlled hydrocarbon powered machines. Oil was the catalyst that propelled the 20th century’s world leaders into fortune and thrust the world into war. Oil is a finite fuel, controlled by a few nations that are barely separated geopolitically and have common ancient civilizations and modern goals.

Already struggling from Viet Nam and Great Society debts, America found herself the object of a politically motivated oil embargo in 1973. Fuel prices soared and supplies tightened to cause the 70’s stagflation in America. From then until now, America has not found the political will through fluctuating fuel prices to organize an intervention away from oil dependence.

Since the embargo, America has consumed 250 billion barrels of oil at a total cost of $11 trillion dollars. This debit line in our national budget has only one trade, oil for dollars. Had America given our energy war a smidgeon of the effort of placing a man on the moon, we could have easily reduced energy consumption by 20 percent for the same productive output, transportation, and environmental comfort, and saved 2.2 trillion dollars. Surely, the costs to achieve such a modest conservation would have to be netted from the gross, but those costs could have been internally generated and added to America’s GDP.

America’s Multinational Corporations (MNC) were Indifferent Citizens

While America fought the war on poverty, her political leaders surrendered to the war on American jobs. Certainly, with the relative world peace supported by America’s military, globalization was bound to occur. With the risk of direct foreign investments reduced, the last five decades have unleashed an acceleration of money flow and intellectual capital from America to other countries.

While over 4 trillion dollars have been invested overseas by American uberwealthy, America has also been a receiver of investment, so that the net outflow has only been 0.7 trillion. However, the loss of America’s wealth and jobs has been much greater, contributing to a stagnant workforce where one in four able Americans has been idled. MNC direct foreign investment has indirectly added $4 trillion dollars to America’s debt.

The Fed Financed MNCs and Saved Banks but Failed to Keep America Employed

During most of the 17th century, Europe embroiled itself in wars that killed 30% of its population. Some of the world’s largest banking houses failed as royal debtors defaulted, including England in1672. Finally, in 1694, the king agreed to give the Bank of England authority to print all of England’s bank notes in exchange for bank loans to support his war with France. The newly created Central bank, having transferred its risk of loss to British subjects, profited simply by printing money for the monarchy. However, this excess printing did not stop the emptying of England’s coffers.

After America revolted to escape the monetary control of the Bank of England, Hamilton, the United States’ Secretary of the treasury, proposed a charter to a create a similar central bank for America. Against Thomas Jefferson’s insistence, the First Bank of the United States became the precursor to America’s Federal Reserve. Some say major banks manufactured a bank run in 1907 to destabilize the Treasury and instigate support for the Federal Reserve Act of 1913 establishing the Fed, a quasi-agency, private enterprise with a quasi-public board.

From the establishment of the Fed until today, many have argued that major Fed decisions have enriched banks at the expense of the American People. An example is the erroneous decision the Fed made to keep interest rates high for an extensive period of time as America and the World clearly were entering the Great Depression. Also of heated debate was the decision to bail out the banking industry at the start of the Great Recession.

Nonetheless, Fed decisions combined with lobbied efforts to reduce financial regulations, allowed Wall Street to orchestrate multiple financial bubbles that consecutively destroyed value in American portfolios. It cost taxpayers $88 billion to bail out the S&L crisis. The boiling and bursting of the dot.com bubble evaporated $5 trillion dollars. Notwithstanding that the credit default bubble lost the world $30 trillion in value, it has thus far cost America $51 billion in bank bailouts, $787 billion in stimulus, $1.5 trillion in quantitative easing, $5 trillion in lost property values, and with over 5 million bankruptcies and 5 million foreclosures, ruined trillions of dollars worth of wealth generating credit.

In Conclusion

Adding up the numbers versus our $15 trillion dollar debt, it is amazing that the resiliency of the American economy is thus far holding ground:

10,000 tons of gold: $0.5 trillion
Wars: $3.4 trillion
Great Society: $9.5 trillion
Lack of Energy Policy $2.2 trillion
MNC DFI: $4.0 trillion
Banking Debacles: $12.4 trillion +
Total $32.0 trillion

The idea of currencies unsupported by gold reserves is not in itself troublesome. Whether Crowley shells, tally sticks, or paper money, if the market has trust in its role as a place holder for non-incidental barter, any money will do. However without the external discipline imposed by a gold standard, America must instead substitute gold’s imposition for a President strong enough to stand for American sovereignty, a Fed subjugated to defend a stable currency, a Congress selfless enough to impose its own financial discipline, and a willingness of American businesses to defend American jobs. Otherwise, America’s five decade reign over this short lived worldwide fiat money dollar system will come to an end.

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Filed under American Governance, China, Federal Reservre, Foreign Policy, Free Trade, Full Employment, Multinational Corporations, U.S. Monetary Policy, U.S. Tax Policy, War, World Sustainability

The Periodic War Between Carbon and Silicon has Begun

What an abundant element this carbon is and yet what trouble it presents the world. So many deaths have occurred trying to control it. Prior to the industrial era, kings compiled great armies, sometimes exceeding a million men, who thrust swords and spears supported by thousands of slaves and serfs drawing up carbon from the earth in foodstuffs to supply these fighting masses with the energy needed to control the earth’s wealth.

With the industrial revolution, the ready supply of liquid carbon could easily be transformed by machines to produce goods that used to require the energy of thousands of men. Industrialists could now produce great wealth without logistical and political control of millions of people. Carbon concentrated wealth and power in the hands of a few “robber barons” who lacked political structure but who learned how to harness this plentiful element. They used their newfound wealth to transform and influence the new politics of the 20th century.

The greatest multinational corporations of the early 20th century, the oil conglomerates, were the first and only to be tried for treason against the United States directly after WWII. When it was found that the American federal government was complicit in their treason, the trials ended quietly, forever establishing carbon’s place as the greatest influencer of industrialized national politics throughout the 20th and early 21st century.

Now, the world is attempting to stand up against carbon’s combustion consequences as scientists finalize their debate of its cataclysmic environmental destruction effects. Thankfully prior to the industrial age, the earth was able to recapture the carbon used by man faster than he could combust it. However, since the early 1900′s, industries and transportation have accelerated combustion, and disasters have been escalating both in size and number in direct correlation to carbon’s excess formation in our upper atmosphere.

While governments continue to debate its impact on our environment, their concerns will be of little consequence to its continued use. Because great concentration of wealth requires great emission of CO2, and because consolidation of the world’s wealth is still in its infancy, the political and business powerful will continue to accelerate carbon combustion to amass wealth, even exacerbating environmental consequences by transferring production assets miles and oceans away from the ultimate consumers through globalization.

The acceleration of carbon emissions into our atmosphere has not only rapidly transformed world politics, a majority of scientists claim it has rapidly transformed the environment, leaving the world little time to compensate, e.g. melting polar ice caps. I suggest that it has deteriorated the earth’s living organisms just as rapidly because Darwinism cannot compete with its detrimental effects.

The human body consumes carbon to live and the brain has a set point that tells us to exhale when carbon reaches its upper limits in our blood stream. However, since the tobacco industry’s escalation of carbon into the lungs quarter of the world’s population, now a quarter of all deaths in the world occur as our body’s carbon exhaling mechanism fails because of smoking and we slowly suffocate to death through the ravages of COPD brought on through years of inhaling carbon.

We know that man’s internal set point for carbon in the bloodstream has been constant for millions of years but so has his lower set point. On a macro level it appears that higher atmospheric CO2 is causing global melting. On a micro level, since environmental CO2 has edged to a slightly higher concentration in the air we breathe, how are our Darwinian body systems compensating?

Whether or not carbon combustion is destroying our ecosystem or our biological compensation, this element carbon in its liquid form will be the engine of mass transfers of wealth and world destabilization for years to come. The international banking system will continue to support capital flow in pursuit of carbon transfers. And America’s quantitative easing II has only helped to clear a temporary but sizable log jam in the carbon transfer system, while destabilizing America’s future.

The common man, unorganized against the concentrated power of carbon, lost his voice. Governments have been transformed to a carbon base. While impossible for the masses to fight fire element with fire element, another element on the periodic table has risen up in defense. As seen in recent North African demonstrations and less recently in the American Tea Party movement, the common man has begun to rally around the element, silicon.

Only second in prevalence to oxygen, silicon is the 21st century answer to carbon, connecting a diverse human race in a social network, more energy rich than its carbon based industrialized political nemesis. From the garages of Silicon Valley, the silicon chip has risen on an accelerated path of discovery and development to harness the ideas of man and to create libraries of digital thought that each year promises to double our collective recorded knowledge. Based upon this sea of infinite intellectual capacity, the common man has learned to communicate through fiber highways in such a way as to connect the very synapses of millions, nay billions of individual brains into a virtual organic computer focused on the survival of mankind.

In fact, the word computer has become obsolete, as silicon has enabled this virtual organic mass to connect through the internet’s social gateways to become an analyzer, a discerner, a communicator, a wisdom generator, an emotional synthesizer, a political organizer, a voice harmonizer, unifier and amplifier. The word computer has, in fact, only been a fuzzifying place holder as mankind is only now rallying the true potential of this siliconic instrument.

The common man has now emerged as a metamorphosed political force that can no longer be contained by traditional carbon party constraints. Individual social media democrats have slid around conventional party politics like sand through a sieve to rally through non-party power dynamics like the American tea “party” and mass North African freedom rallies to demand and garner political change. Not to be outdone, carbon is racing to concentrate further through MNC networks to cement its worldwide dominance on the periodical table. The race between carbon and silicon is being played out as we speak, and individuals around the planet are taking sides in this great battle. My bet is for silicon to edge out carbon in years to come.

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Filed under Multinational Corporations, Social Media Democracy, World Sustainability